The rule of 72 calculator will give you an estimate for the amount of time necessary to double your money with any investment based on the interest rate you earn. The calculator is very simple. It’s based on what is called the “rule of 72” which is this: to estimate how long it will take to double your money, take the number 72 and divide by the interest rate.
How do you use the Rule of 72 Calculator?
The rule of 72 calculator asks for just two inputs: the amount of money you start with (don’t put commas in the figures); and the interest rate you want to apply.
When you click on “Calculate”, the rule of 72 calculator will then display the number of years it will take you to double your money. Of course, it’s the rate of interest that affects how long this will take, not the amount of money.
What are the limitations of the Rule of 72 Calculator?
The calculation is limited to interest that is compounded. As an easy exercise for you or for your kids, you can calculate how long it would take to double your money if the interest generated was not compounded (not reinvested). In that case, you’d get the answer by dividing 100 (and not 72) by the interest rate. So for our example above of 4%, it would take 25 years for your money to be doubled if the interest was not reinvested, compared to around 18 years for interest that was reinvested.